Measurement and Verification

Overview

Energy efficiency offers the largest and most cost-effective opportunity for both
industrialized and developing nations to limit the enormous financial, health
and environmental costs associated with burning fossil fuels. Available, cost effective investments in energy and water efficiency globally are estimated to be tens of billions of dollars per year. However, the actual investment level is  far less, representing only a fraction of the existing, financially attractive opportunities for energy savings investments. In the interest of brevity, throughout this document the terms “energy” and “energy savings” represent both energy and water. Although there are differences between energy
efficiency measures and water efficiency measures, they share many common attributes and are often part of the same project.

If all cost-effective efficiency investments were made public and commercial buildings in the U.S., for example, efficiency project spending would roughly triple, and within a decade would result in savings of $20 billion per year in energy and water costs, create over 100,000 permanent new jobs and significantly cut pollution. For developing countries with rapid economic growth and surging energy consumption, energy and water efficient design offers a very cost effective way to control the exploding costs of building power and water treatment plants, while limiting the expense of future energy imports and the widespread health and environmental damages and costs that result from burning fossil fuels.

These efficiency opportunities and their inherent benefits prompted the U.S. Department of Energy in early 1994 to begin working with industry to develop a consensus approach to measuring and verifying efficiency investments in order to overcome existing barriers to efficiency. The International Performance Measurement and Verification Protocol (IPMVP, or sometimes called the MVP) was first published in 1996, and contained methodologies that were compiled by the technical committee that comprised of hundreds of industry experts, initially from the United States, Canada and Mexico.

In 1996 and 1997, twenty national organizations from a dozen countries worked together to revise, extend and publish a new version of the IPMVP in December 1997. This second version has been widely adopted internationally, and has become the standard M&V documents in countries ranging from Brazil to Romania. According to Mykola Raptsun, former Deputy Chairman of State Committee of Ukraine Energy Conservation, now President of ARENA-ECO, the Ukrainian energy efficiency center:

The IPMVP has broad application for businessmen, energy managers, law makers and educators and could become the national standard document for M&V. It has been important in helping the growth of the energy efficiency industry in Ukraine. North America’s energy service companies have adopted the IPMVP as the
industry standard approach to measurement and verification (M&V).

According to Steve Schiller, President of Schiller Associates, a leading energy
efficiency consulting firm:

[In the United States], referencing the International Performance Measurement and Verification Protocol (IPMVP) has become essentially a requirement associated with developing both individual energy efficiency performance contracting projects as well as performance contracting programs. Almost all performance-contracting firms now state that their work complies with the IPMVP Thus, in a few short years the IPMVP has become the de- facto protocol for measurement and verification of performance contracts.

Institutions such as the World Bank and International Finance Corporation (IFC) have found the Protocol beneficial and are incorporating it as a required part of new energy efficiency projects. According to Russell Sturm, Senior Projects Officer, Environmental Projects Unit, International Finance Corporation:

“In our work at the Environmental Projects Unit of the IFC, we seek investments in the emerging ESCO markets of the developing and transition economies of the world. While these markets hold promise, the challenges on the road to commercial viability are formidable. IPMVP provides the foundation necessary to build credibility for this emerging industry, helping us to establish a level of comfort among local players that is essential for broadbased acceptance in the marketplace.”

As a result of strong and widespread interest, participation in developing this third edition has expanded to include a global network of professionals from around the world and includes national organizations from 16 countries and hundreds of individual experts from more than 25 nations. The work was drafted by volunteers serving on committees composed of leading international experts in their respective fields. Overall responsibility and direction is provided by the Executive Committee, composed of a dozen international experts who share a goal of strengthening and fostering the rapid growth of the energy and water efficiency industries. Our Financial Advisory Subcommittee has helped ensure that this document is valuable to the financial community in
facilitating and enhancing efficiency investment financing.

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